It is hard to imagine an address closer to the heart of American power. The offices of the Carlyle Group are on Pennsylvania Avenue in Washington DC, midway between the White House and the Capitol building, and within a stone's throw of the headquarters of the FBI and numerous government departments. The address reflects Carlyle's position at the very center of the Washington establishment, but amid the frenetic politicking that has occupied the higher reaches of that world in recent weeks, few have paid it much attention. Elsewhere, few have even heard of it.

This is exactly the way Carlyle likes it. For 14 years now, with almost no publicity, the company has been signing up an impressive list of former politicians - including the first President Bush and his secretary of state, James Baker; John Major; one-time World Bank treasurer Afsaneh Masheyekhi and several south-east Asian powerbrokers - and using their contacts and influence to promote the group. Among the companies Carlyle owns are those which make equipment, vehicles and munitions for the US military, and its celebrity employees have long served an ingenious dual purpose, helping encourage investments from the very wealthy while also smoothing the path for Carlyle's defense firms.

But since the start of the "war on terrorism", the firm - unofficially valued at $13.5bn - has taken on an added significance. Carlyle has become the thread which indirectly links American military policy in Afghanistan to the personal financial fortunes of its celebrity employees, not least the current president's father. And, until earlier this month, Carlyle provided another curious link to the Afghan crisis: among the firm's multi-million-dollar investors were members of the family of Osama bin Laden.

The closest the Carlyle Group has previously come to public attention was last May, when a Seoul-based employee called Peter Chung was forced to resign from his £100,000-a-year job after sending an email to friends - subsequently forwarded to thousands of others - boasting of his plans to "fuck every hot chick in Korea over the next two years". The more business-oriented activities of Carlyle's staff have been conducted much more quietly : since it was founded in 1987 by David Rubenstein, a policy assistant in Jimmy Carter's administration, and two lawyer friends, the firm has been dispatching an array of former world leaders on a series of strategic networking trips.

Last year, George Bush Sr and John Major traveled to Riyadh to talk with senior Saudi businessmen. In September 2000, Carlyle hired speakers including Colin Powell and AOL Time Warner chair Steve Case to address an extravagant party at Washington's Monarch Hotel. Months later, Major joined James Baker for a function at the Lanesborough Hotel in London, to explain the Florida election controversy to the wealthy attendees.

We can assume that Carlyle pays well. Neither Major's office nor Carlyle will confirm the details of his salary as European chairman - an appointment announced shortly before he left the House of Commons after the election - but we know, for the purposes of comparison, that he is paid £105,000 for 28 days' work a year for an unrelated non-executive directorship. Bush gives speeches for the company and is paid with stakes in the firm's investments, believed to be worth at least $80,000 per appearance. The benefits have attracted political stars from around the world: former Philippines president Fidel Ramos is an adviser, as is former Thai premier Anand Panyarachun - as well as former Bundesbank president Karl Otto Pohl, and Arthur Levitt, former chairman of the SEC, the US stock market regulator.

• The Carlyle Group /Bin Laden Connection
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• FBI Told To Back Off Bin Ladens
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• The UNOCAL Oil Pipeline and Afghanistan
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• CARLYLE GROUP SPINS THE REVOLVING DOOR
  How Bush and other ex-politos profit from connections and access

• Bush Hides Presidential Records
  What doesn't he want Americans to know?

• Bush Companies Seized under Trading With the Enemy Act
  Old news, really. Really old news.

• Dick Cheney's Business Dealings in Iraq

• Bush Timeline

Carlyle partners, who include Baker and the firm's chairman, Frank Carlucci - Ronald Reagan's defence secretary and a former deputy director of the CIA - own stakes that would be worth $180m each if each partner owned an equal slice. As in many areas of its work, though, Carlyle is not obliged to reveal the details, and chooses not to.

Among the defence firms which benefit from Carlyle's success is United Defense, a Virginia-based contractor which makes vertical missile launch systems currently on board US Navy ships in the Arabian sea, as well as a range of other weapons delivery systems and combat vehicles. Carlyle's other holdings span an improbable range, taking in the French newspaper Le Figaro and the company which bottles Dr Pepper.

"They are big, and they are quiet," says David Mulholland, business editor of Jane's Defense Weekly. "But they're not easy to get information out of, [but] United Defense are going to do well [in the current conflict] ." United also owns Bofors, a Swedish munitions manufacturer.

Carlyle has said that it does not lobby the federal government, thus avoiding a conflict of interest when, for example, Carlucci met Rumsfeld in February when several important defiance contracts were under consideration. But critics see that as a matter of definition.

"It should be a deep cause for concern that a closely held company like Carlyle can simultaneously have directors and advisers that are doing business and making money and also advising the president of the United States," says Peter Eisner, managing director of the Center for Public Integrity, a non-profit-making Washington think-tank. "The problem comes when private business and public policy blend together. What hat is former president Bush wearing when he tells Crown Prince Abdullah not to worry about US policy in the Middle East? What hat does he use when he deals with South Korea, and causes policy changes there? Or when James Baker helps argue the presidential election in the younger Bush's favor? It's a kitchen-cabinet situation, and the informality involved is precisely a mark of Carlyle's success."

The world of private equity is an inherently secretive one. Firms such as Carlyle make most of their money buying firms which are not publicly traded, overhauling them and selling them at a profit, so the process by which likely targets are evaluated is much more confidential than on the open market. "These firms certainly don't go out of their way to get into the headlines," says Steven Bell, chief economist at Deutsche Asset Management. "They'd rather make a splash in Institutional Pensions Week. The aim is to realize very high returns for your investors while exerting a high degree of control over the company. You don't want to get into the headlines when you force the management to fire a director."

The process has worked wonders at United, and this month the firm announced plans to go public, giving Carlyle the chance to cash in its investment.

But what sets Carlyle apart is the way it has exploited its political contacts. When Carlucci arrived there in 1989, he brought with him a phalanx of former subordinates from the CIA and the Pentagon, and an awareness of the scale of business a company like Carlyle could do in the corridors and steak-houses of Washington. In a decade and a half, the firm has been able to realise a 34% rate of return on its investments, and now claims to be the largest private equity firm in the world. Success brought more investors, including the international financier George Soros and, in 1995, the wealthy Saudi Binladin family, who insist they long ago severed all links with their notorious relative. The first president Bush is understood to have visited the Binladins in Saudi Arabia twice on the firm's behalf.

The Carlyle Group does not employ anyone at its Washington headquarters to deal with the press. Inquiries about the links with the Binladins (as most of the family choose to spell their name) are instead referred to someone outside the company, on condition he is referred to only as "a source familiar with the relationship". This source says: "I can confirm the fact that any Binladin Group investment in Carlyle has been terminated or is being terminated. It amounted to a $2m investment in the Carlyle II Fund, which was anyway a very small portion of a $1.3bn fund. In the scheme of the investments and in the scheme of the business of either party it was very small. We have to get this into perspective. But I think there was a sense that there were questions being raised and some controversy, and for such a small amount of money it was something that we wanted to put behind us. It was just a business decision. "

But if the Binladins' connection to the Carlyle Group lasted no more than six years, the current President Bush's own links to the firm go far deeper. In 1990, he was appointed to the board of one of Carlyle's first purchases, an airline food business called Caterair, which they eventually sold at a loss. He left the board in 1992, later to become Governor of Texas. Shortly thereafter, he was responsible for appointing several members of the board which controlled the investment of Texas teachers' pension funds. A few years later, the board decided to invest $100m of public money in the Carlyle Group. The firm's magic touch was already bringing results. Today, it is proving as fruitful as ever.

Here in Reality

ENRON gave TALIBAN $millions! Bush Family Value$ Iran Contra The Liberal Media Myth List of Bush Lies Election 2000 Lies AWOL Bush What Bush Knew Before 911 GOP - Grand Old Petroleum FBI's Most Wanted Terrorists

January 12, 2002

President Bush has received more money from Enron, its employees and their relatives over his political career than from any other source. The contributions supported Bush's unsuccessful House campaign in 1978, his two campaigns for Texas governor, renovation of his governor's office, last year's presidential race, his inaugurations and his presidential recount fund.

Among the contributions :

• Texas governor's races :
  at least $312,500, including $122,500 from Enron CEO Kenneth Lay and his wife, Linda Lay; at least $160,000 from other Enron employees and their relatives; at least $30,000 from Enron political action committee.

• 2000 presidential campaign :
  at least $113,800 from Enron's PAC, its employees and their relatives, including $2,000 each from Kenneth and Linda Lay.

  Kenneth Lay also raised at least $100,000 for the campaign as a member of the Bush "Pioneers."

• Presidential inaugural gala :
  $100,000 from Enron; $100,000 from Kenneth and Linda Lay; $100,000 from then-Enron President Jeffrey Skilling.

• Bush presidential recount :
  $5,000 each from Kenneth and Linda Lay; $500 from Enron employee Hal Elrod.

Sources : Center for Public Integrity; Center for Responsive Politics; Texans for Public Justice.

BERNARD WEINER

March 6, 2002

Don't know about you, but all this war and politics stuff can be mighty confusing. So I picked up a copy of "The 'War on Terrorism' for Dummies," a kind of primer on current events, and now feel much better educated. Here are some of their answers.

Q. Is this all about oil and greed and profits?

A. Not all. Life is complex. Politics is even more complex. (Not as complex as marriages, but close.) The Persian Gulf historically has been a shaky area politically. The developed world has to find another, more stable area to service its oil needs. The next large commercial oil reserve is in the Caspian Sea area of Central Asia, but how to bring that oil and gas to market without having to go through Russia? Obviously, a more southern route. True, oil and gas companies had plans for a pipeline through Afghanistan long before the year 2001, but they put their plans on hold while the political situation there was so chaotic. When the authoritarian Taliban finally brought order to the country, the U.S. government began talks with the Taliban leadership—some of those talks were in Texas—about that old pipeline idea. Eventually, the Taliban said no, whether because the money offered wasn't enough or out of ideological reasons isn't clear. Then the terror of 9/11 happened and the bombing of Afghanistan began. The Taliban were removed from power, a new government installed, and now talks are progressing on the joint Pakistan/Afghanistan pipeline, to handle the Caspian Sea oil from the former Soviet "stan" republics.

Now the above facts might seem to suggest that the true answer to the question posed above is Yes. But, as we said, things are often much more complex than they seem to be on the surface. We can't forget that the U.S. mainland was attacked in a most vicious way—nearly 3000 people lost their lives in the attacks on the World Trade Center and Pentagon, and another plane was on its way to a populated target before it crashed into the ground in Pennsylvania. Any American leader, beholden to oil companies or not, would have had to respond to protect American citizens and property. Osama bin Laden and his al-Qaeda terrorist network have made it very clear that they are not finished, and that there is no such animal as an "innocent civilian." American "infidels" must die, period. The nation responded by going on the offense in rooting out as many terrorists as possible and disabling their financing and operational network.

So, yes, access to cheap oil and gas is one, maybe even THE major, ingredient in the mix of why the U.S. is behaving the way it is—as it certainly was in the Persian Gulf war under Poppa Bush—but greed and profit are not the ONLY reasons.

Q. Did the Bush Administration know about or participate in any way with the events leading to the terrorist attacks on 9/11?

A. All the facts are not yet in. At this point, it appears that the Bush Administration knew that a major attack of some sort was going to happen—for months prior to 9/11, Osama had been telling his supporters that "something big" was planned against America, probably in America—but the U.S. probably didn't have specific intelligence as to what that meant.

There are conspiracy theorists around who question why Air Force fighters weren't scrambled in time to shoot down the suicide jet-bombers, why the CIA chief in Dubai may have met with bin Laden in July, why many institutional investors bought "put options" (gambling that the stock would go down) on airline stocks before 9/11, and so on. And perhaps more information about these and other questions will be revealed in time, as more investigative digging unearths more facts, but right now what's out there is mostly conjecture and circumstantial evidence, devoid of smoking guns. At the time of the 9/11 terrorist mass-murders, it's likely that chaos and ill-preparedness and the usual bureaucratic bungling and incompetency prevailed.

Now, having said all that, one must note that the events of 9/11 arrived at just the right time for the beleagured Bush Administration. Its conservative agenda was bogged down in Congress because the Senate was now controlled by the Democrats, Bush was taking great heat (and was the butt of stand-up comedians) for being an ineffectual dolt, and so on. Suddenly, bin Laden hands Bush the gift of terrorism on American soil and lo and behold, he is a different man, the public is solidly behind his responses to terrorism, the Democrats are cowed into silence, the conservative agenda is back on track.

True, the Bush administration has played the "patriotism" and "national security" cards to rationalize whatever policies and bills it wants passed. But that only reveals how cynical and manipulative they are, not that they were necessarily involved in a mass-murder conspiracy with Islamic extremists. (But why has Dick Cheney warned Congressional leaders not to delve too deeply into pre-9/11 events? Hmm.)

Q. Is John Ashcroft a proto-fascist?

A. Yes. If he were an official in the Taliban, he'd feel quite at home. But before going into his record, let us remember that Ashcroft was chosen by Bush. Ashcroft is the lightning rod taking the heat, but it's the Bush Administration that creates and approves his policies. Now to Ashcroft : You may remember that after he lost his Senate re-election bid to a dead man, his appointment to be Attorney General made it through the Senate with one vote to spare. He was villified as a narrow-minded supporter of racist organizations, a hard-line, uptight, puritanical theocrat who would force his right-wing agenda on the country. Ashcroft swore he would do no such thing. He lied. The events of 9/11 gave him the opportunity to fly his far-right, draconian agenda under the political radar by couching everything under the rubrics of "national security" and "homeland defense." He has shredded the U.S. Constitution—on everything from vitiating attorney-client confidentiality to permitting phone taps and black-bag jobs and computer privacy violations—and has made it virtually impossible for the press and ordinary citizens to find out what's going on under the Freedom of Information Act. (In addition, Ashcroft has reversed his states'-rights philosophy and is trying to overturn the "death with dignity" act voted into law by Oregon citizens and medical-marijuana laws voted into law by citizens of a number of states.) It's not just his puritanically spending public monies to clothe naked statues; this guy is bad news for the Constitution.

Q. What is Enron all about, and why should ordinary citizens care?

A. Enron is reflective of Reagan/Bush-era corporate greed, and the public be damned. It's very common these days for large , high-priced auditing firms to be in bed with those they supposedly are auditing. Enron was all about making money for the firm's executives and directors—including huge sums made from multitudinous military contracts. Enron covered its ass not only by its alignment with shoddy auditing firms but by buying political influence; millions of dollars were given to political officeholders, three-fourths of them Republican. Kenneth Lay, the CEO of Enron, for years favored Bush with his largesse, in Texas and in Washington, D.C., and got all kinds of favors in return, including deregulation (read: letting corporations do whatever they want, devoid of much oversight) and letting Lay pick those who would oversee his industry. The Bush Administration is like an Enron alumni reunion, with the officials in charge of investigating Enron formerly working for Enron. There may even be Enron tie-ins to the Afghanistan pipeline plan. Bush himself pretends that he barely knows Mr. Lay. It's all rather nauseating, especially when you realize there are a lot of undiscovered Enrons out there.

Q. Will Bush be impeached?

A. Whoa! Let's not get ahead of ourselves here. Impeachment (or resignation) certainly is a possibility down the road, as this influence-peddling scandal unwinds and deepens. But Bush isn't going to get cornered easily. He's bobbing and weaving pretty good, trying to keep the public convinced that Enron is only a business scandal and doesn't involve him or his administration at all; but it seems clear (and most Americans agree in recent polls) that Bush is hiding something that could prove a major political embarrassment for him and his Administration. To that end, he's trying to keep all documents relating to Enron locked up tight in the White House. Congress may subpoena documents and back up their demands by taking the Administration to court—as the Government Accounting Office, the non-partisan investigatory arm of the Congress, is doing—and he'll drag that out as long as possible, hoping that the case might take years to get to the U.S. Supreme Court . There, he's counting on his conservative majority—the one that installed him in office—coming through again to save him. The key fight here, which is just beginning, is whether an Independent Counsel, one with no ties to Enron and not beholden to the Bush Administration, will be appointed to investigate. The Democrats are starting to call for a special prosecutor, and the Bush Administration is digging in its heels mightily, saying that the Justice Department (the same department loaded with former Enron employees and consultants) can handle the job quite well, thank you very much, you're either with us or with the forces of evil.

Q. Why are the Democrats acting so cowardly in confronting Bush's domestic and foreign policies?

A. Leaving aside the fact that many Democrats—coming from the same corporate-culture mentality—agree with Bush on many things, including the advisability of the "war on terrorism," a great many feel they can't risk being anything other than a Loyal Opposition while the country is "at war." (There has been no Declaration of War by the Congress, and Bush is not about to ask for one, since doing so would imply that the Legislative Branch should share power with the Executive. The Bush Administration wants to share power with no one, in or out of the country.) The Democrats feel they would be branded "unpatriotic," or "soft on terrorism," and not get re-elected, and, understandably, that they would not be able effectively to battle Bush's non-war-related policies, such as on drugs-for-seniors or Medicare reform or education or whatever. So they're doing a kind of soft-shoe shuffle in place while waiting to see if and when the climate of the electorate begins to shift away from automatic support for Bush. Since this is just now starting to happen, you can expect to see the Democrats become a bit bolder. Perhaps as more and more American troops become engaged in more and more countries, and more body bags begin coming back to this country, and the draft is re-instituted, the Democrats will come out of their shells and assert a more courageous attitude. But ordinary citizens probably will have to lead them once again.

Q. Is there any possibility that the Bush Administration will attempt to alter U.S. policy in the Middle East and elsewhere, so that more terrorists don't grow out of the soil of mass poverty, lack of hope, dictatorial regimes and Western slights to their religion?

A. No. There is not the slightest indication that the Bush Adminstration gives a fig for making any changes. It's the world's only superpower, so it thinks it can do whatever it wants. Military power and threats are expected to keep recalictrant countries in line. If changes were made in U.S. policy and terrorism began to recede, the necessary objective conditions for keeping Bush in power and the country in a state of insecure fright, would begin to deteriorate. So don't hold your breath that the situation will improve until Bush and those supporting him are removed from office.

Q. Are you really part of the "Dummies" publishing empire?

A. No. And you're not dummies either. Organize, agitate, educate—and defeat Republican candidates in November, thus ensuring (if the Senate and House are both once again in Democrat party hands) that Bush's hard-right agenda goes nowhere for two years. During that time—assuming Bush hasn't been impeached or resigned by then—we all build the electoral foundation for his removal from office in 2004.

Bernard Weiner, Ph.D., has taught American politics and international relations at Western Washington University and San Diego State University. He was with the San Francisco Chronicle for nearly 20 years.